Explained: India’s new maritime insurance pool amid global tensions

The Union Cabinet has cleared the creation of the Bharat Maritime Insurance Pool (BMI pool), backed by a ₹12,980 crore sovereign guarantee, to address growing risks in global shipping driven by geopolitical tensions.

The move comes at a time when conflicts, particularly in West Asia, are disrupting global energy supply chains and increasing uncertainty in maritime trade. These disruptions have made insurance more expensive and, in some cases, difficult to access.

According to the government, this creates a strategic vulnerability for India, which depends heavily on international insurers for maritime coverage.

What exactly did the government announce?

Information and Broadcasting Minister Ashwini Vaishnaw explained the scope of the scheme, saying: "Any ship that goes into the ocean has insurance. Insurance is available for many types of activities. There's basic insurance for damage. Another is for protection and indemnity... A sovereign guarantee fund of approximately Rs 12,980 crore will be created for maritime insurance. It will cover all types of maritime risks, including machinery, cargo, and war. It will be given to Indian-flagged vessels, Indian-controlled vessels, and those with either an origin or destination in India. This will be for a ten-year period, with a five-year extension.”

The pool will ensure that ships linked to India continue to get insurance coverage even when operating in volatile maritime regions.

What problems is this pool trying to solve?

An official release highlighted that rising geopolitical instability has significantly increased risks for ships and cargo, leading to higher premiums and uncertainty over insurance availability.

"With increased global volatility and geopolitical instability, maritime trade has been impacted with increased risk of losses for cargo and vessels resulting in increased insurance costs and uncertainty in continuous availability of insurance. Further, there is high dependence of Indian vessels on International Group of Protection and Indemnity (IGP&I) Club for P&I insurance covering third-party liabilities like Oil pollution liability, Wreck removal, Cargo damage, Crew injury and repatriation, Collision liabilities and so on," the release stated.

This dependence on foreign insurance providers exposes Indian shipping to potential disruptions, especially during sanctions or conflicts.

Why is a domestic insurance pool important now?

The government believes a domestic insurance mechanism is necessary to safeguard trade continuity and reduce external dependence.

"Accordingly, there was a need for a domestic maritime risk covering pool to maintain sovereignty and continuity of trade in face of withdrawal of coverage due to sanctions or due to geopolitical tensions,” it added.

By creating the BMI pool, India aims to ensure that insurance coverage remains available even if global insurers pull back.

How will the Bharat Maritime Insurance Pool function?

The BMI pool will cover a wide range of maritime risks, including hull and machinery, cargo, protection and indemnity (P&I), and war risk.

Policies will be issued by member insurers using a shared underwriting capacity of around ₹950 crore. A governing body will oversee its operations.

The initiative is also expected to build domestic expertise in marine underwriting, claims management, and legal frameworks tailored to Indian shipping needs.

What does this mean for India’s trade and shipping sector?

The pool is designed to ensure uninterrupted trade flows by guaranteeing access to affordable insurance for ships connected to India, regardless of global uncertainties.

It also aligns with broader policy goals of self-reliance and strategic autonomy, reducing dependence on international insurance systems and strengthening India’s control over critical trade infrastructure.

(With inputs from ANI)